Bright Future For Buy To Rent
It is common knowledge that property is a sound investment, even if the returns are slow to come to fruition. Bricks and mortar are seen as something solid to which you can add value and just wait patiently for the prices to rise before reaping the rewards. Buying real estate in a holiday destination such as Ibiza, however, is a completely different ball game and opens up a whole world of opportunities in the lucrative business of Holiday Rentals and the Long Term Rental market.
Research and preparation is essential when buying with the intention to rent, but that doesn’t detract from the fact that it is a very worthwhile pursuit. Under new legislation introduced this year the island is to be divided into zones and only properties within the permitted zones and those which are deemed suitable for ‘holiday rental’ will be considered for a tourist license. In all instances it is advisable to buy a property which already has a license or has been approved because falling to do so could leave you facing a fine.
Do remember, a property can also be purchased to then be made available for longer rental periods such as one month, six months and multi annual periods. Any rental periods of over 30 days are known as Long Term rents and very importantly, NO tourist license is required for these longer term types of lets. Buying a property to then make available in the longer term rental market is welcomed in Ibiza as this provides very much needed housing for locals and workers alike.
It would be wise to seek the best legal advice before purchase of a home that you wish to rent to holidaymakers. Ibiza has built its reputation on exclusive homes for the discerning island dweller with a very high percentage of its properties falling into the luxury price bracket. The average cost per square metre over 7,000€, compared with 5,000€ in Mallorca and just 2,300€ in Menorca. In fact, Ibiza has more than three times as many holiday homes in the 3–5 million euro price range and six times as many in the €5– 10million euro range than its Balearic neighbour Menorca.
If you are looking for property in Ibiza which falls within the medium price range the regions around Santa Eulalia, Sant Josep, or Sant Antoni are the best places to consider as such properties make up between 20% and 25% of available real estate. These areas are also popular holiday destinations and buying a home, at a realistic price, could generate a good deal of income as soon as the acquisition is complete.
In Sant Joan and Ibiza Town only one in ten homes fall into the medium-priced category with some valued at up to 10,000€ per square metre. The property here is largely upmarket and can be leased at a premium. The island of Ibiza differs from Menorca as it is smaller by some 125 square kilometres but is as densely populated as the island of Mallorca. This means a larger concentration of coastal development and a rich diversity of property type surrounding each major resort. Regional price variations are concentrated into an area measuring a mere 570 square kilometres, meaning that location can be critical but equally that there are properties to suit everyone.
Renting privately in Ibiza will always prove lucrative, no matter the size of property or where on the island it is situated. The previous few years has seen completion of many off-plan projects and the regeneration of several areas in which tourism had shown a slight decline. The introduction of taxation on tourism will ensure further improvement and sustainability. A greater demand for holiday homes and the continued popularity of the island has nursed the real estate market in Ibiza to a more stable position after the difficulty of ten years ago. A new awareness of the need to regenerate and improve conditions for all visitors to the island will help to ensure that it continues to thrive and grow.
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